Last week saw the release of quarterly earnings from Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA) and Apple (AAPL). At the opening of Monday’s session — today, 2 February — the Nasdaq 100 index (US Tech 100 mini on FXOpen) opened with a bearish gap, sliding towards the 25,100 level.
While many of the Big Tech earnings reports were strong, the broader market reaction suggests that:
→ investors have become increasingly sceptical about massive capital expenditure (capex) on artificial intelligence, as seen in Microsoft’s case;
→ even solid results, such as those delivered by Apple, are no longer triggering rallies.
It appears that market participants are placing greater emphasis on uncertainties related to:
→ the new Fed Chair;
→ the risk of another US government shutdown;
→ rising geopolitical tensions (with Greenland, Iran and Ukraine potentially joined by Cuba).
When analysing Nasdaq 100 price action (US Tech 100 mini on FXOpen) six days ago, we:
→ identified an ascending channel (shown in blue);
→ considered a scenario involving another false bullish breakout following the move above the 13 January high;
→ anticipated a modest technical correction.
Since then:
→ the price has marginally extended the channel, while its slope has remained unchanged;
→ the index declined from the upper boundary to the lower boundary of the channel, with the median acting as resistance (as indicated by the arrow);
→ this was followed by a bearish break below the lower boundary.
As a result, Nasdaq 100 price action can now reasonably be viewed as a corrective phase, with the potential to evolve into a downward trajectory (shown by the red lines).
If bears are to maintain control, it would be logical for them to assert dominance over the area around 25,500 — the zone where the ascending channel was broken.
Also read: From Surge to Struggle: World Liberty Financial (WLFI) Tests Market Nerves, Lift-Off or Letdown?
